4 Markets Flashcards
1st Mkt
aution mkt
exchange floor
NYSE
brokers gather around Designated Mkt Maker (DMM) who acts as an autioneer
National Best Bid & Offer (NBBO)
on
First Market
DMM must offer National Best Bid & Offer (NBBO)
33% of the time
NBBO is highest posted bid & lowest offer
Second Mkt (OTC)
no “auctioneer”
negotiated mkt
online exchange listed Sec on Nasdaq
Over the Counter Bulletin Board (OTCBB)
Pink Sheets
Second Market bid
Nasdaq Mkt Makers must offer a firm bid and ask
Over the Counter Bulletin Board (OTCBB)
quotes for SEC that do not meeting listing req of Nasdaq
Pink Sheets
electronic quotes for SEC that dont have to be regestered with SEC
Third Mkt
exchange listed sec off the exchange
between B/D
must be reported to Consoliated Tape w/in 30 seconds
(like 1st Mkt)
also reported to teh FINRA Trade Reporting Facility
Fourth Mkt
institutional investors
avoiding brokers - no commissions
dark pools
(4th Mkt)
non-public trading
high degree of anonymity
Principal Transactions
dealer - buying or selling securities out of own investments
Agent Transactions
broker
charge commission
matchmaker for buyer & seller
Market Maker
Dealer/ Principal
offers bid (buy highest) and ask (sell lowest)
Inside Mkt
inside quote
Best Bid Offer (BBO)
highest bid & lowest ask on Nasdaq
doesn’t include Mkt Maker comm
Ticker Info on tape
a tick =
$0.01
plus tick - upward price change
down tick - downward price change
Locked Quote
MM enters a offer = bid or ask price
